Governor Jindal Says Drilling Moratorium Second Manmade Disaster, Calls on President to Work Quickly to Ensure Safety and Protect Jobs

PORT FOURCHON (June 10, 2010) - Today, Governor Bobby Jindal stood with community leaders and around 200 workers from the oil and gas industry to call on President Obama to quickly lift the deepwater drilling moratorium that is expected to have a devastating effect on Louisiana’s economy.

The Governor was joined by many of the chambers of commerce and business groups of the newly formed Gulf Economic Survival Team (GEST) which he asked Lt. Governor Scott Angelle to organize as a grassroots effort to spread the message that the President’s moratorium will have a severely negative impact on Louisiana.

Governor Jindal said, “Our bottom line is that we absolutely want drilling to be done safely, but it shouldn’t take months of federal government committees and meetings. We need effective oversight of this industry. Just because the federal government can’t do their jobs doesn’t mean thousands of Louisiana should lose their jobs. We should not have to choose between our coast and the safe production of energy. That is a false choice for Louisiana and our people.”

“When I met with President Obama last Friday, I expressed my very serious concerns about his deepwater drilling moratorium and the harmful effects it is having on our economy. Just this morning, Senator Mary Landrieu and I both told the White House again that this moratorium absolutely must not go on for six months. Reviews must be done quickly and that it is clear that we need to do two things immediately.

“First, we’re calling on the President to ramp up the inspection and regulatory process at the Minerals Management Service so we are not facing this shut down for six months, and especially not 12 to 18 months, as Morgan Stanley investment analysts expect. I am asking all of you to visit www.GEST.LA.gov right away to call on the President to speed up the review of these wells quickly so the future of our Louisiana jobs and communities are not in jeopardy. The President will be back on the Gulf Coast Monday and Tuesday. Let’s make sure our message is heard by the White House loud and clear.

“Second, we need to make sure our workers get compensated. The President says that BP will pay the unemployment claims associated with the moratorium. BP has not committed to that though. But, our people don’t want a claims check or an unemployment check; they want to get back to work. They want to have their jobs so they can count on a paycheck to feed their families.

The Governor noted that eight experts out of the fifteen who advised Secretary Salazar on how to improve the safety of offshore drilling – say they never agreed to the six-month drilling moratorium. Governor Jindal said, “Secretary Salazar claimed they peer reviewed a report on how to implement safety improvements for drilling. But, the eight experts say the moratorium language wasn’t even in the draft they reviewed and they believe the suspension will have a negative impact on the economy. In a statement issued by the group, they said, “A blanket moratorium will have the indirect effect of harming thousands of workers and further impact state and local economies suffering from the spill.”

The Governor also highlighted the negative impact the moratorium will have on Louisiana’s economy. Governor Jindal said, “The President’s six-month suspension of activity on 33 permitted deepwater drilling rigs, including 22 deepwater drilling rigs off Louisiana’s coast is a direct hit to our state’s economy that is already suffering from the BP oil spill and its closure of water areas for fishing and our beaches from tourism.”

The Louisiana Department of Economic Development estimates that the active drilling suspension alone will result in a loss of 3,000 to 6,000 Louisiana jobs in the first two to three weeks and potentially over 10,000 Louisiana jobs within a few months. The state risks losing more than 20,000 existing and potential new jobs over 12 to 18 months, if this federal panel takes longer than six months to do their reviews and write their reports.

Governor Jindal said, “This moratorium is about more than just numbers, it is about the very livelihoods of our people, families, and communities. The Louisiana Department of Natural Resources estimates that direct drilling rig jobs support around 180 to 280 workers per rig.”

An estimated 33 percent of the nation’s domestic oil comes from the Gulf of Mexico. Eighty percent of the Gulf’s oil and 45 percent of its natural gas comes from operations in more than 1,000 feet of water – or deepwater.

The Governor added, “This is about more than just direct jobs – this shut down will kill related services and other indirect jobs that support these rigs too. Right here at Port Fourchon in Lafourche Parish – you service around 90 percent of deepwater operations in the Gulf of Mexico. This affects your whole community, in addition to Houma, Lafayette, St. Mary Parish and so on. In Louisiana’s coastal communities such as Houma, Morgan City and Lafayette an estimated 1 in every 3 jobs is related to our oil and gas industry.”

The Louisiana Department of Natural Resources estimates that an average of two supply boats work every day with rates of $15,000 to $30,000 a boat, which means that suspension of drilling activity will result in a nearly $1 million loss per day in supply boat rental income. Estimates also show that each drilling rig job supports four other jobs in local communities.

Governor Jindal noted that idle drilling rigs in the Gulf could be contracted overseas for work in other locations, and may not return to the Gulf of Mexico for several years, greatly extending this current economic crisis for the state. Indeed, a recent Morgan Stanley report said there is a 60 percent chance that the moratorium will last 12 to 18 months.

GEST found that several of the safety recommendations set forth by the U.S. Department of Interior can be implemented immediately – or within 30 days. Leading industry experts have said there is an alternative approach that federal regulators could take, including:

Re-certifying all BOP equipment used in floating drilling operations and ensure their suitability for the rig and well design.

Ensuring rig personnel are trained to industry- and government-accepted standards for well-control procedures;

Reviewing operator well plans, with particular emphasis on casing and cementing designs to ensure sufficient pressure barriers and that designs are fit for purpose.